Charts, the diviner's rod

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Charts, the diviner's rod

Charts, the diviner’s rod
Just like a diviner walking a field to find a good water source, the technical analyst uses charts as his divining rods. Some people call it science, some call it magic, and some even call it a fool’s game. Those that practice it though feel it is part art and part science with a little faith thrown in, and the technical analyst can’t do his job without at least some sort of chart.

The chart may be as simple as a line of closing prices, or as complex as a Heikin Ashi or Point and Diagram chart. Below you will find the three basic charts most commonly used in the forex market.

With few exceptions, we will concentrate on the candle chart just above here. This type of chart has a lot of information just as it is. The candle chart was developed in Japan in the 18th century by rice trader Homma Munehisa. Folk lore calls him the most successful trader in history, sometimes making over $10 billion a year. Regardless of whether or not his reputed success is accurate or not, the charting system he came up with was easy to read and comprehend.

It may appear boring at first, bet spending just a small amount of time getting to know your chart types will be beneficial. Open your platform, open the same chart three different times and change them so you have one of each of the three charts. See if you can identify the benefits and draw backs of each type.

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